Featured Product

    FED Publishes Results of the 2019 Stress Tests for Banks

    June 21, 2019

    FED published a report presenting results of the Dodd-Frank Act Stress Test (DFAST) exercise for 2019. The results of this year’s stress test cycle show that all 18 banks subject to the supervisory stress test exceeded the required minimum capital and leverage ratios under the severely adverse stress scenario. However, in the aggregate, the 18 firms would experience substantial losses under both the adverse and severely adverse scenarios. Nevertheless, these firms could continue lending to businesses and households, due to the substantial build of capital since the financial crisis.

    Only the largest and most complex banks were tested this year. As previously announced, smaller and less complex banks were not tested this year and are on a two-year cycle, consistent with the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act. The report on the 2019 DFAST results provides:

    • Details of the adverse and severely adverse supervisory scenarios used in DFAST 2019
    • An overview of the analytical framework and methods used to generate FED’s projected results, highlighting notable changes from last year’s program
    • Information about recent efforts to increase transparency
    • Additional details about FED’s assumptions in the supervisory stress test
    • Results of the supervisory stress test under adverse and severely adverse scenarios for the firms that participated in DFAST 2019, presented both for individual institutions and in aggregate

    The results confirm that the largest and most complex banks have strong capital levels that would allow them to stay well above the minimum requirements, after being tested against the severe hypothetical recession. In the severely adverse scenario, losses are projected to be USD 410 billion. The aggregate common equity tier 1 capital ratio would fall from an actual 12.3% in the fourth quarter of 2018 to its minimum of 9.2%, before rising to 9.7% at the end of nine quarters. Loan losses in this year's stress test are broadly comparable to those from past years. Credit card loans showed the highest losses, followed by commercial and industrial loans. 

    The DFAST cycle begins in the first quarter of 2019 and ends in the first quarter of 2021. The firms tested this year represent about 70% of the assets of all banks operating in the U.S. Results of the Comprehensive Capital Analysis and Review, or CCAR, will be released on June 27, 2019.

     

    Related Links

    Keywords: Americas, US, Banking, Stress Testing, Dodd-Frank Act, Stress Test Results, DFAST, CCAR, Basel III, EGRRCP Act, FED

    Featured Experts
    Related Articles
    News

    APRA Updates Lists of Validation and Derivation Rules in December 2019

    APRA updated the lists of the Direct to APRA (D2A) validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities.

    December 13, 2019 WebPage Regulatory News
    News

    APRA Finalizes Prudential Standard for Credit Risk Management of Banks

    APRA updated the prudential standard on credit risk management requirements (APS 220) for authorized deposit-taking institutions, post a public consultation.

    December 12, 2019 WebPage Regulatory News
    News

    EIOPA Consults on Guidelines on ICT Security and Governance

    EIOPA issued a consultation on guidelines on the Information and Communication Technology (ICT) security and governance by insurers.

    December 12, 2019 WebPage Regulatory News
    News

    BCBS Consults on Design of Prudential Treatment for Crypto-Assets

    BCBS published a discussion paper on the design of prudential treatment for crypto-asset exposures of banks.

    December 12, 2019 WebPage Regulatory News
    News

    NCUA Approves Delay of Risk-Based Capital Rules Until January 2022

    The NCUA Board held its eleventh open meeting of 2019 and approved a final rule to delay the effective date of the risk-based capital rules for credit unions to January 01, 2022.

    December 12, 2019 WebPage Regulatory News
    News

    APRA Issues Operational Risk Rules, Consults on Reporting Requirements

    APRA published an updated prudential standard APS 115 that sets out operational risk requirements for authorized deposit-taking institutions in Australia.

    December 11, 2019 WebPage Regulatory News
    News

    ESMA Updates Q&A on European Benchmarks Regulation in December 2019

    ESMA updated the question and answers (Q&A) document on the European Benchmarks Regulation.

    December 11, 2019 WebPage Regulatory News
    News

    APRA Decides to Keep Countercyclical Capital Buffer for Banks at 0%

    APRA announced its decision to keep the countercyclical capital buffer (CCyB) for authorized deposit-taking institutions on hold at zero percent.

    December 11, 2019 WebPage Regulatory News
    News

    ESMA on Draft Amendments to Indices and Recognized Exchanges Under CRR

    ESMA issued the final report on draft amendments to the Implementing Regulation (EU) 2016/1646, which specifies the main indices and recognized exchanges, under the Capital Requirements Regulation (CRR), that are relevant to credit institutions and investment firms subject to prudential requirements and trading venues.

    December 11, 2019 WebPage Regulatory News
    News

    FED Extends Consultation Period for Capital Requirements for Insurers

    FED is extending comment period for the proposed rule establishing risk-based capital requirements for depository institution holding companies that are significantly engaged in insurance activities.

    December 10, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4316